Pure Risk Involves Only a Chance of Loss

question 32

True/False

Pure risk involves only a chance of loss.

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Definitions:

Capital Gains

The profit earned from the sale of assets or investments, such as stocks or real estate, measured by the difference between the sale price and the original purchase price.

Interest Rate Risk

The potential for investment losses due to changes in interest rates.

Zero-Coupon Bonds

Bonds that do not pay periodic interest and are issued at a significant discount to their face value, maturing at par value.

Life Insurance

A contract between an insurer and an insured, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.